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Winnebago (WGO) Moves 7.7% Higher: Will This Strength Last?

Winnebago (WGO) saw its shares surge in the last session with trading volume being higher than average. The latest trend in earnings estimate revisions may not translate into further price...

This story originally appeared on Zacks

Winnebago Industries (WGO) shares soared 7.7% in the last trading session to close at $78. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 0.1% loss over the past four weeks.

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Shares of the recreational vehicle (RV) maker jumped on Friday as strong demand for RVs prompted BMO Capital Markets to raise its price target on Winnebago, while maintaining its 'Outperform' rating on the stock. Even after stepped-up vaccinations, safety remains at the top of mind for most Americans, which has sustained the RV momentum. In fact, demand for campers, motorhomes and other RVs are off the charts, resulting in massive backlog for Winnebago. The company is also riding on the strength of its buyouts including Newmar and Barletta. However, while robust demand bodes well, rising input costs and shortage of RV components amid global supply crunch may pose near-term hiccups for Winnebago.

This RV maker is expected to post quarterly earnings of $1.98 per share in its upcoming report, which represents a year-over-year change of +36.6%. Revenues are expected to be $936.32 million, up 26.9% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Winnebago, the consensus EPS estimate for the quarter has been revised marginally lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on WGO going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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